Melbourne households will see their water bills rise by as much as $220 next financial year.
The Essential Services Commission announced its final decision on metropolitan water prices on Tuesday morning, revealing water bills will increase by between $167 and $222.
The price increases will take effect from July 1 and impact customers of Melbourne Water, City West Water, South East Water and Yarra Valley Water.
The commission’s chairman Dr Ron Ben-David said the price increases were largely driven by the cost of Victoria’s desalination plant.
‘‘Of the increase, about two-thirds to three-quarters is due to the desalination plant,’’ he said.
Water bills across Melbourne will increase by an average 22.4 per cent, plus inflation.
However, Dr Ben-David said the price rises over the next five years were less than the increases initially put forward by the water businesses.
‘‘This represents a significant reduction from the increases originally proposed by the businesses of between $269 and $355,’’ Dr Ben-David said.
He also pointed out that ‘‘after the first increase, price rises will plateau and will only move in line with inflation’’.
Opposition water spokesman John Lenders argued the government’s ‘‘record dividends and charges’’ were the ‘‘largest single draw’’ on water price increases.
Water Minister Peter Walsh said the government expected to pocket ‘‘a bit over $200 million’’ in dividends from water businesses.
‘‘The same criteria’s there for dividends as was under the labour party when they were in government,’’ he said.
Minister Walsh said it was ‘‘doing everything possible to manage the price increases’’ for households who are paying for a desalination plant which he said was ‘‘far too big and far too expensive’’.
The Essential Services Commission has only approved Melbourne Water’s price plan for the next three years, rather than five years, due to costs associated with the desalination plant.
‘‘We have not been able to satisfy ourselves about Melbourne Water’s capacity to undertake capitalisation (of the desal plant) before 2016,’’ Dr Ben-David said.
‘‘Our view is that Melbourne Water will be able to afford some capitalisation after 2015-16, and pass on the savings to customers,’’ he said.
Melbourne Water will be required to submit a new five-year water plan, to take effect from July 2016.
